ACSA fees threaten air travel in South Africa – Comair
08. Dec, 2009
2 Comments
Yasas Sri-Chandana, chief financial officer of Comair Limited and representative on Airlines Association of South Africa, says that the current financial crisis that ACSA finds itself in, and the resultant request for a 133 percent increase in airport charges, threatens the growth of air travel in South Africa.
“Like Eskom, ACSA is calling on users of its airports to fund its financial shortfall,” says Chandana. “In the past few years ACSA has made profit margins of over 24% and has paid billions of rands worth of dividends to its shareholders – which include government, the PIC and ACSA management. ACSA fees that impact on air ticket prices include the passenger charge, landing fees and rentals, cumulatively amounting to R81 per passenger per single trip. The proposed increases would take these charges up to over R185 per passenger (see table below). When you consider that a low cost flight between Johannesburg and Durban costs on average only R300, ACSA charges will make up more than half the cost of a ticket.
“As airlines, we support the upgrading of terminals at OR Tambo and Cape Town International Airports which have been long overdue. We too feel proud of the modern airport facilities when we arrive back into South Africa after a trip overseas. However the level of spend on ACSA’s projects has been excessive, not only from a planning stage but also in terms of overspending relative to plan.
“The clearest example is the new La Mercy Airport in Durban which, when completed, will have cost over R7-billion (the original proposal was R3-billion). The current Durban Airport (DIA) is perfectly functional and has significant growth capacity. New ‘low cost’ terminals overseas, like the one in Kuala Lumpur, Malaysia, are being constructed at a fraction of the cost of ACSA airports. These airports have limited retail offerings and focus on self service check kiosks rather than large banks of expensive check-in counters. Ryanair, one of the most successful airlines in the world, carries almost 50 million passengers a year around Europe, mostly to low cost, affordable airports.
“Ultimately, only free competition will determine whether ACSA’s rates are fair or not. Lanseria Airport offers Johannesburg and Pretoria-based travellers rates that are significantly lower than OR Tambo Airport. kulula currently operates more than half of its flights from the privately owned airport located to the north-west of Johannesburg. Comair recently put in a proposal to ACSA to purchase Durban Airport so that residents of Kwazulu Natal could enjoy a choice between two airports. The response so far from ACSA is that competition will not be allowed. In a freely competitive environment it is unlikely that airports would be able to contemplate the proposed 133% tariff increase in an industry where margins are consistently under pressure, especially in the current economic environment. In Europe, Zurich Airport is planning free off-peak landing and parking fees to help retain its competitive position.
Currently only ten percent of South Africans get to travel by air each year. Only with affordable air ticket prices and airport charges will more South Africans have the opportunity to travel by air. Our tourism industry, which according to SA Tourism, contributes eight percent to our GDP, also depends on the affordability of air travel into and around our country. ACSA’s financial shortfall should be funded by its shareholders, not air travellers. The Airlines Association will continue to work very closely with the regulator to promote a healthy industry and protect the interests of air travellers in South Africa,” he concluded.
My name is Muzi Mohale a full-time travel blogger, your host at Travelwires.com responsible for all editorial on this blog. I blog about the travel and tourism industry in Africa. Apart from blogging about tourism, I also run 
I completely agree Muzi…this all comes down to a lack of competition. I cant believe that ACSA are actually able to say that no one can use the old airport as they dont want the competition. Where is the competition commission now?
I recently had several business class fare quotations prepared for myself. On perusing the fare breakdowns, I couldn’t help but notice that ACSA’s taxes are higher than those of some of the establieshed and busiest airports in Europe! Sure, ORTIA’s ongoing renovations make it very new and shiny compared to Heathrow, Zurich, Munich or Frankfurt but then again these airports offer something that ORTIA generally doesn’t: service. Checking in, be it domestic orinternational, especiall at the CTB for SAA, remains a nightmare beyond compare!